Retailers pushing pricey warranties
Many New Zealand retailers are still promoting extended warranties without making it clear what benefits they offer.
Shops that sell whiteware and appliances often sell extended warranties that offer cover for any repairs after the manufacturer’s own warranty expires.
These can cost up to 15 per cent of the purchase price. But in many cases, customers are just paying for protection they already have through the Consumer Guarantees Act, which requires that goods to be of acceptable quality and fit for purpose.
Retailers selling an extended warranty must now to explain the protections that consumers already have under the act and compare that with the extended warranty. They are also meant to offer a cooling-off period.
Vacuum cleaner retailer Godfreys was recently stung for breaching these obligations.
But our mystery shop across the country this week found that some misleading information was still being doled out.
In Wellington, Noel Leeming in Featherston St told our reporters that they would get a one-year warranty on a television, but could take the option of paying $369 to be covered for three years, or $539 to be covered for five years.
At Lyall Bay, Noel Leeming said a two-year manufacturer warranty on a fridge could be extended with a Noel Leeming warranty. In neither case was any mention made of the Consumer Guarantees Act rights available.
Jason Bell, executive general manager of merchandise at Noel Leeming, said when customers purchased an extended warranty, called Supercover, they were given a booklet including the details of the warranty, how to make a claim and what was and was not covered.
‘‘The booklet is provided to the customer along with a receipt from the item purchased, which is stapled to the back inside page of the booklet. Warranties are entirely the choice of the customer. Customers retain all their rights under the Consumer Guarantees Act.’’
Harvey Norman has been criticised in the past for pushing extended warranties.
This week, in Whangarei, a salesperson told our reporter that they no longer offer extended warranties – and instead sell ‘‘product care replacement’’, which she said was a type of insurance that would offer a full replacement if something went wrong with a product, rather than a repair.
In Auckland, a similar message was conveyed when we looked at a washing machine.
‘‘It goes above and beyond the Consumer Guarantees Act basically because it replaces the machine, it doesn’t repair it,’’ the salesman said.
A four-year extended warranty for the machine would cost $279. He said under the Consumer Guarantees Act, machines should last for a reasonable period of time.
‘‘Warranties are entirely the choice of the customer.’’ Jason Bell of Noel Leeming
But Harvey Norman recommended customers buy the extended warranty, he said.
‘‘Believe it or not even Consumer do recommend it now because it’s a replacement plan and it does cover you for commercial use as well.’’
Consumer NZ does agree that an extended warranty that offers replacement rather than having to wait for repairs might be appealing.
In Christchurch, Harvey Norman staff told our reporter 15 per cent of stoves would fail within five years and 95 per cent of the problems were caused by ‘‘wear and tear’’. The Consumer Guarantees Act allows for normal wear and tear.
At Godfreys in Auckland, our reporter was told that it only offers extended warranties on top-of-theline machines but instead of being bought separately by the customer, it was included in the price.
But Chris Mason, general manager of Godfreys in New Zealand, said it did not sell extended warranties or include them in the price.
Farmers in Christchurch was the only retailer in our investigation who provided a reporter with a booklet offering information about the extended warranty available before a purchase was agreed.
Consumer NZ said extended warranties could be useful in situations where an appliance was going to be used more heavily than would be considered normal, such as a washing machine in a very big household.